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Publishers delay e-book releases to combat cut-rate pricing

updated 11:25 pm EST, Wed December 9, 2009

Titles held back four months past print shipments

Several major publishers have begun delaying e-book releases to combat the competitive price slashing of best sellers, according to The Wall Street Journal. Simon & Schuster is putting a four month hold on 35 titles scheduled for release next year, while Lagerdere SCA's Hachette Book Group is planning to take similar actions.

The surge in digital publishing has been aided by devices such as Amazon's Kindle and Barnes & Noble's Nook. A variety of other devices are already on the market, with additional alternatives scheduled for release during the holiday season or early next year.

E-books have even established a strong presence on smaller devices such as the iPhone. While games had dominated the new App Store submissions for most of 2008 and 2009, e-books took the lead beginning in September.

"The right place for the e-book is after the hardcover but before the paperback," said Simon & Schuster CEO Carolyn Reidy. "We believe some people will be disappointed. But with new readers coming and sales booming, we need to do this now, before the installed base of e-book reading devices gets to a size where doing it would be impossible."

While traditional book publishers are attempting to transform their business model to maximize profits in the age of e-books, magazine and newspaper publishers have been preparing to reinvigorate their segment by optimizing media for the latest mobile devices. Condé Nast, Hearst, Meredith, News Corp and Time recently announced a joint venture aimed at distributing their respective content through a common portal and optimizing publications for computers, smartphones and tablets.

Hachette will follow the same route as Simon & Schuster, maintaining a delay of three to four months before releasing digital versions of potential best-sellers. We're doing this to preserve our industry," said Hachette's CEO David Young. "I can't sit back and watch years of building authors sold off at bargain-basement prices. It's about the future of the business."

"Authors get the most publicity at launch and need to strike while the iron is hot," argued an Amazon spokesperson. "If readers can't get their preferred format at that moment, they may buy a different book or just not buy a book at all."

The pricing conflicts are not limited to current e-book offerings, as many best-sellers are now sold for $10 even as a hard-cover edition. The American Booksellers Association, a group representing many independent bookstores, recently accused several retailers of predatory pricing. The organization suggests outlets such as Amazon, Walmart and Target have been selling the hardcovers at a loss.

A book that retails for $35 typically carries a wholesale price of around $17.50. The ABA claims the retailers have not received special pricing, but are nonetheless selling each title at a significant loss in a pricing war designed to lure customers. The group is asking the Department of Justice to investigate the practices, including the pricing of print books and digital editions.

"What's been demonstrated is that next quarter results are better if you cling to the existing core business, that it's better to sell physical media than digital media," BigChampagne's Mr. Garland to WSJ. "But for how many quarters can you employ those tactics before they become an obvious strategic disadvantage? The digital marketplace today is devastating the traditional music business, regardless of piracy issues."



By Electronista Staff
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Comments

  1. facebook_Mayur

    Via Facebook

    Joined: Dec 2009

    -1

    comment title

    your comment

  1. starwarrior

    Fresh-Faced Recruit

    Joined: Mar 2006

    +2

    DRM Days Again (Sort of)

    Why must they go done this tortuous path? Just another example of old school management control of something that cannot in the new age be controlled. Apple or someone will own them in a few years.

  1. DanielSw

    Fresh-Faced Recruit

    Joined: Aug 2009

    +2

    Only tactics without strategy

    Another example of a complacent industry caught off guard without future-pointed planning or strategy.

    Too bad, boys. The tsunami is coming, though.


  1. danviento

    Fresh-Faced Recruit

    Joined: Dec 2005

    +4

    Cut Rate Pricing? Ha!

    Let's see, with ebooks:
    1. You don't have to manufacture a physical book, just make a digital file.
    2. You don't have to warehouse a stock of books.
    3. You don't have to ship the books, just pass the file to the online store's server.
    4. You don't have to worry about printing extra copies that get sold later for a lower price, cutting into your margin.

    So with all of those MAJOR costs taken out of the picture, why the h*** do people think the worth of the book is still almost $20? We buy paperbacks for less than $10, for goodness sake. Remember when those were $6 not so long ago?

    Besides marketing, there really isn't a large financial investment or risk at a book's launch when you sell it in ebook form. To gripe about margins and say ebooks are undercutting your hardcover sales is ridiculous. At the near $20 price point, ebooks are almost pure profit in terms of the costs to the publisher of putting it in your hands.

    Due to the ridiculously high price-to-value ratio, and restrictive drm, you can bet I'd rather use a hot plate to melt off book bindings and feed the physical pages through a duplex feed scanner and then process the images in an OCR rather than pay double the paperback price for something that costs maybe half of that to produce.

    If publishers are serious about selling ebooks in volume, there's one place they really need to look to up their sales: lower prices. Can't anyone else see the benefit of lower prices and high volumes?

    Maybe this rumor-that-won't-die apple tablet used en-masse might boost sales enough to wave higher volume sales in front of publishers faces.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: Cut rate pricing

    So with all of those MAJOR costs taken out of the picture, why the h*** do people think the worth of the book is still almost $20?
    ...
    Besides marketing, there really isn't a large financial investment or risk at a book's launch when you sell it in ebook form. To gripe about margins and say ebooks are undercutting your hardcover sales is ridiculous. At the near $20 price point, ebooks are almost pure profit in terms of the costs to the publisher of putting it in your hands.


    Oh god, it's the same tired arguments as to the labels wanting to charge more than 5 cents for a song.

    Do you know how much money a publisher spends on producing a book (not the 'physical' book, just the finished product)? Do you really think the finished product is made by the author, and all the publisher does is hit 'print'? These things get edited and re-edited, non-fiction works need fact checking and validation. You may get lawyers involved if there might be concern over plagarism, copyright, etc.

    And what of all the time, money (advances) and manpower put into works that end up not getting published. That needs to get paid from somewhere.

    But, just like the record labels, no one cares about the actual costs. It's all just "Well, they don't need to pay to print it, so it should be really cheap!". As if it just falls out of a tree in a day.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    +1

    Pricing

    rather than pay double the paperback price for something that costs maybe half of that to produce.

    And how come when it comes to digital goods, everyone just throws out demand economics? Why is it cheaper to get into a movie 6 weeks after it was released than on opening night (OK, in the good ol' days it was this way)? Why are DVDs more expensive the day they are released then 6 months later?

    Did they magically become cheaper? No. They know there's a segment that will buy something at price X, and those that will buy it at Y. Why start selling at Y when you can get suckers who'll pay more? Then, when that's over, start selling it cheaper to get those who are willing to wait.

    The problem here isn't the publishers as much as Amazon. Amazon isn't being altruistic here or anything (I don't recall them complaining about regular books being overpriced or not available until certain times). They're just speaking out because it affects them with their Kindle sales.

  1. danviento

    Fresh-Faced Recruit

    Joined: Dec 2005

    +2

    Sales in volume - cont'd.

    I guess my earlier comment needed to be appended with a treatise on worth and value in comparative market differences.

    Right now, book publishers as a whole are hurting in comparison to a decade or two ago. Aside from cultish favorites, reading as entertainment isn't as popular. What's a sinking industry to do?

    Anecdotally, I've seen books take longer and longer to move from hardcover to paperback. I don't know what the trigger is for most publishers. Perhaps a monetary value accrued by some sales point? Whatever it is, I'd theorize that publishers are playing chicken with trying to reach that point and outlasting people's interest who are only willing to pay the price for a paperback.

    When it comes to hardcover and paperback additions, you're basically selling in similar markets with lots of crossover between them. Digital copies, however, are entirely different. Once people start to make the move to an entirely digital reader system, you're loosing crossover buyers because of the stark difference in storage and use of pieces of literature. I believe that's the real fear behind Mz. Carolyn Reidy's above comment.

    At the current price ranges for each version, you might be able to bring a few readers up from paperback more often to buy the digital copy, especially with the earlier release date, that wouldn't otherwise spend the money on a hardcover. However, in their mind, it's the people who don't buy the normally higher price-point hardcover that become a problem. Once these people start the migration from a paper library to a digital one, it won't be long before almost no one is buying paper copies. The gotta-have-it-now crowd was given a taste of the even more addictive drug for instant gratification with 60 second start-to-finish acquisition thanks to Amazon and kindle. Mz. Reidy's comments say that they don't want this to spread.

    My earlier description of lower overhead costs leading to much greater profit realization in digital copies makes you wonder why they would take this action, though. Perhaps this relates back to the worry over piracy. Aside from the method I described above, there isn't a viable way to copy a book for dissemination. DRM lockdown seems to be the past prescribed and failed method to sell digital copies and prevent piracy. I personally prefer Apple's buyer-tagged non-DRM scheme with a lower price point to DRM. At least with this, if a file is spotted sharing over P2P, you know who the original holder was, and who to go after.

    As to my complaint on the current ebook price-point, even for people who are used to paying $6-$9 for a paperback, waiting the publisher out to get a cheaper digital copy has yet to really work, from what I've seen. I think publishers who want to keep the same tiered pricing structure would be smart to offer a price drop after a similar amount of time or sales as they do with paper copies. I'd opine that they fear that overall sales will still be cannibalized by file-sharers, and that's their hold up.

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